““PMR is without doubt one of the most contentious issues that ARC has had to deal with in many years”
“For me, this is my time to ‘put up or shut up’, to take action by being on Committee and trying to make a difference.”
“From a treasurer’s perspective I would like us to move to online publication as soon as possible”.
Tony Wallace—7
Fran Hunter—9
Eugene Mitchell—16
ISSUE 73 | OCTOBER 2014
Time for Wallace
Tempus fugit My first 100 days Tony Wallace p4
arc-forum.org
FIRST
EDITORIAL
WILL RICHARDSON
S
o, the conference season is over. Everyone likes us; they think we’re doing a great job, essential to getting the economy back on track and delivering public services. But – apart from the TUC – no one thinks anything needs to change, we can go on with one-per-cent pay ceilings and hope for the best. Did I miss something? Of course we are re-engaged with HMRC. Anyone who thinks that was an easy decision should have been present while it was being debated: at Committee, at Centre meetings, on the forum and, presumably, among members in their offices around the country. There’s a big difference between an easy decision and an overwhelming majority. The fact that so many of us thought it was the right thing to do doesn’t mean that many of us found it easy or comfortable. And with a firmly anti-union line from government, I doubt whether it was an easy decision for senior management either. But they did the right thing too. There, I said it – sometimes ExCom gets it right. This doesn’t mean I think we were wrong to take industrial action – we were right. In my experience most unions are when they take the tough decision to ask members to take action that might lose them pay or place them in a difficult position with their manager. But it didn’t work, so we had to try something else. That something else is going to be tough too, and it won’t come with any easy answers. We face an election campaign in which public servants may well be demonised – and I don’t suppose many candidates, in the heat of battle, will pause to mention that HMRC brings in substantially all of the money. The pat on the back will go to nurses, police officers, maybe firefighters and the armed forces, pats on the back being so much cheaper than pay rises. But we are back at the table, arguing for our members’ interests and seeking outcomes that are not as bad as they might otherwise be. We go through periods like this every so often, when the job of the union is defensive and outright victories are few and far between. ‘Least bad outcome’ may not be the kind of thing we would want to put on a silk banner to parade along with the rest of the TUC on a march, but looking at what ARC and the FDA have achieved over the last year or so, I guess many TUC comrades would see a kind of survival, which might amount to victory in our current climate. We are the proud inheritors of the first attempt to organise middle class, white-collar employees, back in 1858. We have survived, and we will achieve more for our members in this hostile climate than we would by sulking in our tents. Do I feel comfortable with this? Not even slightly. Do you? Maybe not. But we both know, in our hearts, that we are going through a difficult period for our movement and (whisper it quietly) more difficult for some unions than it is for us. And this too will pass. Will Richardson Editor
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FIRST
CAPTION COMPETITION THIS ISSUE’S COMPETITION
is published by the Association of Revenue and Customs (ARC) 8 Leake Street, London SE1 7NN Tony Wallace, President: 020 7401 5559 President’s Secretary: 020 7401 5573 Fax: 020 7401 5552 Membership: 020 7401 5590 membership@fda.org.uk Editor: Will Richardson arcnewseditor@gmail.com Mobile: 07973 895887 Deputy Editor: Julie Blayney Design & Production: Lexographic james@lexographic.co.uk Advertising and classifieds: Simon Briant SDB Marketing 01273 594455 simon@sdbmarketing.co.uk Printing: Warners Midlands PLC The Maltings Manor Lane Bourne Lincolnshire PE10 9PH
THIS ISSUE’S COMPETITION
The picture shows the procedure sub-committee (left to right, John Parkhouse, Paula Houghton and Graham Flew) at the 2014 AGM. But what might any of them be saying or thinking. Bear in mind that ‘Stuck in the middle’ has already been used (see below). And keep it clean – unless it’s really funny. Entries to arcnewseditor@ gmail.com by the end of November please.
ARCNEWS 71
“‘Clowns to the left of me, jokers to “Down the with right…’” all this”
The views expressed in arcnews are not necessarily the views of the editor or the union. arcnews is printed on environmentally-friendly paper produced from sustainable forests and wrapped in biodegradable polywrap. Please recycle after you have finished reading this magazine.
ARCNEWS 71 COMPETITION
The winner for issue 71 is Nicola Clark, who modestly said it was the first thing to occur to her.
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OCTOBER 2014: ISSUE 73
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FIRST LETTERS
Letters Letters on all topics are welcome. We may edit letters for sense and syntax; please email them to arcnewseditor@gmail.com and mark them clearly for publication or write to ARC, 8 Leake Street, London SE1 7NN.
Keep up the good work I have been retired for 18 years now and can thoroughly recommend it. I keep up with the news through your august journal and read the AGM proceedings with great interest; it brought back happy memories.
What a great achievement to bring in an extra £24bn. I wonder what the great British Public would say if they realised that our members who bring in that extra dosh, which funds government expenditure, are paid considerably less than those who initiate and peddle the avoidance
devices which diminish the amounts available for these essential services. Martin Coath The editor notes: Martin Coath was a long-standing Committee member, serving several years as a Vice-President. He was particularly known for his impromptu wit
at Committee and the AGM (he once told me he couldn’t write comic articles for me as he couldn’t do it ‘in cold blood’.) I well remember his description of a certain type of District Inspector as ‘non-playing captains, or those who have retired without informing the Board’.
ARC FORUM
Sail the Digital ARC Visit arc-forum.org and join the debate. It’s a members-only site and you will need to register the first time you visit. Registration is simple, but if you are new to forums, you can email the forum administrator at fletcherinsussex@btinternet.com and Martin Fletcher will provide a “help card” to explain how the forum works. The forum is becoming a useful place to read about things happening in the union, and also to pass on your views. And you will be able to catch up on the latest by reading Tony’s President’s Blog. Also follow us on twitter: www.twitter.com/arc_union for up-to-date information and news.
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FIRST CENTRE LIASON OFFICES
GRADUATES
Centre Liaison Officers E
ach ARC Centre has a Committee member allocated to deal with their issues, be a point of contact for all members of the Centre and an escalation route for local issues which cannot be resolved.
Any member is, of course, encouraged to contact any member of committee with issues which they feel need to be drawn to the attention of either Committee Member
ARC’s leadership or escalated by us through departmental channels. Below is a list of all the Committee CLOs. They will be in regular contact with your Centre Presidents and Secretaries to ensure that your issues are top of the agenda when Committee meets. Please get in touch and let us know what those issues are.
Centre(s)
Tony Wallace Manchester Nottingham John Parkhouse London Parliament Street Brighton Eugene Mitchell
Glasgow
Gareth Hills
Bristol S&W Wales South West
Mark George London BCD Canterbury Helen Baird-Parker
Legal & Governance
Karen Austwick
Liverpool
Iain Campbell
Edinburgh
Julie Blayney
North East
Will Richardson
Croydon
Amy Carr
Preston
Loz Hutton Hull Leeds Paula Houghton
Norfolk & Suffolk
David Cooper
Sheffield
Jim Rogers
Reading South Coast
Eva Braniff
Northern Ireland
James Mullen
Euston Tower
Jeremy Burrows
Gloucester Oxon & Bucks
James Ewington
West Midlands
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HMRC’s first graduates
O
K, HMRC recruits graduates every year, but these are the first cohort of students to have graduated with HMRC. The Tax Academy has announced the graduation of the first generation of trainees to gain the BA in Professional Studies in Taxation (awarded by Manchester Metropolitan University) following a course if study. The 86 graduates are the first since the arrangement with MMU. They attended a degree award ceremony on 23 July with Tax Assurance Commissioner Edward Troup in attendance. The Tax Academy sees the external accreditation as an important answer to the graduate offer from accountants and legal firms who offer new graduates an externally recognised qualification in addition to the degree with which they join. The BA means that entrants to HMRC
have the opportunity to acquire a similarly externally accredited qualification, as well as achieving their promotion to grade 7. 75% of the BA course is examined, with the remaining 25% workbased learning assessments. While the course is accredited by MMU, the course is designed and delivered by HMRC. Alongside the BA, HMRC and MMU are also running a masters degree in Taxation and Fiscal Policy – most entrants are policy specialists but the initial 21 candidates were chosen from an impressive 114 applicants. In addition to this, other tax professionals are being accredited by the Association of Accounting Technicians ( A AT ) b y c o m p l e t ing job-linked training. Presumably some of these students will achieve further promotion and enter ARC grades too. 5
FIRST
Time Passes Tony Wallace reflects on re-engagement with HMRC and with the wider public
T
empus fugit; that was my old English teacher’s favourite expression (along with “I wasted time and now doth time waste me” – he was a cheery chap all round). Nevertheless time really does fly. I have gone through my first hundred days in a flash and there seems to have been hardly a moment to draw breath. Grasping the machinery of any organisation is a difficult thing to do even in an organisation that you know pretty intimately already, but it is nonetheless a bit of a task. Luckily, I have a great team to support me.
So what has happened in those first hundred days? The new Committee has had a chance to get to know each other and have spent time planning on how we as an organisation can improve the way that we communicate with and serve you, our members, better in the future. We also looked at how ARC is organised at every level from the ground up, there is much that can and 6
must be done to improve things; more on that in next month’s piece. Committee consultation roles and portfolio responsibilities have been allocated and the work of taking forward the resolutions from AGM, set out in last August’s bumper edition of arcnews, is underway. There will be regular updates on what Committee is doing to take those issues forward throughout the rest of the year. We have had the Parliamentary event on tax avoidance which was a great success and to which I will return later. However I think that the most important event and the one I anticipate that you want to hear most about is the ending of the industrial action and my thoughts on what happens next so I will start there.
The End of the Dispute Before I go further I want to put on record a thank you to you, our members. PMR is a very emotive subject for many and views have at times been forcefully expressed. That is healthy but what demonstrates the true calibre of an organisation is how it comes out at the other end arcnews
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“Tempus fugit; that was my old English teacher’s favourite expression (along with “I wasted time and now doth time waste me” – he was a cheery chap all round).”
of a dispute. We have come out with no less strength, fortitude and goodwill than there was before we went in. PMR is without doubt one of the most contentious issues that ARC has had to deal with in many years. The strength of feeling about it remains palpable. It is extremely rare for senior managers and professionals to take industrial action so there must be something fundamentally awry with any system that leads to that level of frustration, a frustration that remains. The last few months have been bruising for ARC, we have been unable to take forward those issues you have asked us to deliver upon and we have been forced to examine arcnews
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carefully how we can best make progress on matters you see as central to your relationship with your employer. In ending the action you have had to make a mature choice between continuing with action which was not delivering for members and allowing ARC to re-engage with our employer to utilise the influence we have around the development of PMR and the wider organisational changes we see happening around us. I know that many of you voted to end the dispute with reluctance and with a heavy heart; I can understand why. But make no mistake we have made it clear that HMRC should not interpret our decision as an acceptance of the PMR system as it currently stands and that neither do we accept that the decision to change the terms and conditions applying to new entrants and promotees was the correct one. It is also fair to say that the employer recognises our position but that it too must operate within the constraints set across the wider civil service. What we have reached is a pragmatic approach to re-engagement on the part of both parties with a view to improving the current situation for us all. Having drawn a line under the dispute, and recognising the need
FIRST
for re-engagement, it is important to set out what that means in practice. The first tangible change was to involve ARC in the after-action review of PMR which has now begun. John Parkhouse and Mark George have attended the initial meetings on our behalf and are presenting the information that you have provided via the Careers not Quotas mailbox. John’s initial report back on those meetings was a positive one, we are getting an audience, and he will be providing an update on outcomes as soon as he is able. By the time that you read this we will have had our initial meetings setting out the mechanism and process for engaging on the other areas subject to discussion. The recommencement of a meaningful dialogue on each of: Performance Management and its relationship to pay; Civil Service Reform; “Building our Future”; The Change Agenda and Career Development. These are all areas where ARC shares an agenda of working with our employer to ensure a successful future for senior professionals in HMRC and again I will give you a fuller update on how those discussions are developing as soon as I am able. We are also building on our Careers not Quotas campaign work. That is all about getting greater recognition for you and the work that you do. Some of it is about delivering on our conference resolutions but also about keeping up to date with your aspirations, and Karen Austwick has written about this at greater length elsewhere. We need your continuing input to our mailbox so make sure that you carry on giving us your feedback on the operation of PMR in practice, your experience of accessing continuing professional development, career opportunities and wider experiences of
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working in HMRC. We need to know about the negatives but we also need to know about any changes for the better if we are realistically going to measure the results of our efforts. We have started the process of reengaging with the employer but none of us live in easy times. What I do promise is that we will keep you informed as things improve; more from committee next month.
Tax Transparency Parliamentary Event There was a fuller report on the event in our July Careers not Quotas special issue. I would, however, like to say a few words on why we as a union must be involved in such activity and the benefits that we can accrue for our members from these events. We are a union of senior professionals and leaders and are, quite rightly, bound by rules of political impartiality. Government policy on what we tax and how we tax it is absolutely the preserve of politicians but it would be odd if this union did not have a view on the wider social debate around taxation and how we can best deliver the outcomes that politicians, of whatever hue, would like to see. It is in that context that the event was organised and it was by all accounts very successful. Much of the genesis of this activity goes back to Graham Black’s day and the introduction of the austerity agenda. In the light of that ARC took a positive decision to widen our activity outside of HMRC. Since then there has been much public debate around how our organisation and our members go about the task that we are set. Much of that debate was ill informed and wildly inaccurate. From a personal point of view, one of the low points was waking up one 8
“We are professional, we are educated and we are skilled. To fail to invest in our people and our skills is to fail to invest in the cost of building and supporting society itself.”
morning to hear John Humphrys suggest that Corporation Tax is assessed by reference to turnover. The lack of a coherent public understanding of even the basics of taxation and the continual propagation of such misunderstandings is damaging to our members. But it is worse than that, it develops in the minds of the public and politicians the suggestion that what we do is really rather simple. Once a notion like that takes root it is then a short step to other massive over simplifications like; so why do we need so many professionals and why do we have to pay so much for expertise? Our members do a great job for this country and are terrific value for money. I won’t go over the figures again, you have seen them and you know them, but we need to keep the skilled work of our members and our organisation at the front of the mind of politicians, outside professionals and the public. Events such as this help us do that and they give us an opportunity to tackle head-on some of the fallacies that continue to do the rounds. For example, at the event itself it was once again suggested that there is some sleight of hand that takes place in determining the correct amount of tax during our negotiations with Large Business customers. I was able to highlight the work that our members actually do and the tax assurance policies within which we all work. I was also
able to propose that the PAC and TSC themselves might benefit from some greater professional advice on taxation matters in advance of their public sessions. Public events like these also open opportunities to engage directly and personally with influential thinkers from outside of our organisation. In advance of the transparency event Iain Campbell and I had the opportunity to speak directly to Margaret Hodge, and over the past few years, my predecessors Gareth Hills and Graham Black have, along with me, been invited to one-to-one meetings with David Gauke, his shadow Shabana Mahmood and LibDem spokespersons on a variety of taxation matters. Beyond that the Tax Understanding Group that Iain Campbell has convened has allowed us to discuss current issues with a wide range of professionals from outside of the business. At every one of those meetings we make sure that the skills, values and professionalism of our members is recognised. If politicians want a professional organisation and want us to properly address the abusive culture of tax avoidance which blights our nation then that brings with it a cost. We are professional, we are educated and we are skilled. To fail to invest in our people and our skills is to fail to invest in the cost of building and supporting society itself. I will take every opportunity that I can to get that fundamental message across. So that is it for the moment. It is late summer and lashing down outside. I am about to load my car and embark for my final week’s leave, in a tent in Scotland, at the end of what has been an eventful summer. And the week after next? I will be coming back to what no doubt will be an equally hectic autumn. Tempus fugit arcnews
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MEET THE COMMITTEE FIRST
Profiles Fran Hunter Committee member (newly-elected in the recent by-election)
“For me, this is my time to ‘put up or shut up’, to take action by being on committee and trying to make a difference.” I joined HMRC, or the Inland Revenue as it was then, in 1988 as a graduate entrant TOHG (now called EO). I spent a year or two learning the clerical role and working with recalcitrant directors before reapplying for full training and being successful at the Selection Board. My first office was Huntingdon (now closed) and I then moved to Plymouth Tax Office (now closed and moved to Derriford) during my training to live with my husband, who was a keeper at the Woolly Monkey Sanctuary in Cornwall. I took a break between final exams and my consolidation year to have the first of my two children, and returned to work part time at Margate Tax Office (also now closed). I was following my husband, who was now doing a masters degree at Kent University. After a hard fight to get my Grade 7, I left on a career break that took me and my family to Belize and the USA, where my husband and I researched and cowrote articles for a scientific journal on neo-tropical primates. Baby number two came along and I returned to the UK and to Huntingdon Tax Office before being asked to join the LBO in Peterborough (now closed – are you seeing a pattern?). I worked as a Case Manager for a few years, including a secondment to KAI, before shipping off again, this time on a three-year secondment to the Falkland Islands. It was here that I put my enthusiasm for learning to use and developed the training programme for tax officers in Stanley. I also took an online TUC course to train to be a Union Learning Rep. On returning to the UK I was placed in LBS Financial in London and took on the ULR arcnews
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role, first in Kingsway (you guessed it – closed!) and then in Bush House. I organised the establishment of a Union Learning Centre at both locations and have tried to keep the focus on learning, in its widest sense, ever since. I was Regional TUC ULR of the year for 2012. I have always been a member of a trade union, from the GMB in my earlier jobs as a video technician, to the IRSF (amalgamated into PCS) and then the AIT (through USRO to become ARC) in HMRC. I maintain links with PCS ULRs and I believe in the trade union movement. I haven’t been on Committee before, nor had any official roles at local level other than ULR and Green Rep, but I want to help ensure ARC’s survival, and to make sure it is relevant to today’s new grade 7s as well as existing members. For me, this is my time to “put up or shut up”, to take action by being on committee and trying to make a difference. Things have never been so tough for us in the public sector, and I want to be part of the fight to get the best that we can, or at least to stop the worst, for ARC members. 9
MIDDLE
Band T Update by Spencer Munn.
Farewell TPDP and hello TSP
S
ummer is usually a quiet time for news about our members below Grade 7; many of them will be taking a well-earned rest from training courses and perhaps enjoying some sunshine. For our 2010 TPDP cohort, this is the final furlong before all their hard work pays off and they are (hopefully!) promoted. Of course, as one generation of trainees leaves the warm embrace of Band T, another joins. As you read this article, the 2014 cadre of tax professional trainees will have started their training courses. A rich history of acronyms has brought us to TSP — the Tax Specialist Programme — and HMRC has 200 of them starting this year, spread all across the country. A new name doesn’t mean that much has changed, and our TSPs will still be put through the same testing combination of exams and casework as tax professionals before them. One major change, though, is the (re-) introduction of streaming for the 2014 cohort, and for the 2013 TPDP trainees once they reach their final year. The creation of streaming opportunities should be a great way for 10
trainees to specialise in the area where they ultimately want to end up working, and ARC is keen to support the broadening of their promotion options. The announcement that streaming will include policy roles, for example, shows a welcome willingness from the employer to plan for the future and to offer a diverse set of career paths. At the same time, of course, there will be challenges ahead, both in the allocation of individuals to business areas and for those business areas taking on trainees for the first time. ARC will be working closely with HMRC to make sure that this positive development plays out fairly in practice. ARC was at the TSP welcome events on 16 and 18 September in Manchester to give our new recruits an overview of what the union does and, in particular, its work on behalf of our Band T members. If there are trainees starting in your office, then don’t be shy – welcome them in, and sign them up! For many of the new recruits this will be their first permanent job after leaving university; some will never have been members of a trade union before, and the reassurance that their peers, managers and colleagues are members is really important. They are the future after all! arcnews
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THE FUTURE OF ARC
Iain Campbell plots the future for the union.
Building a Future A
round 80% of the Department have now attended HMRC’s Building our Future events. Whilst we don’t always agree with HMRC on how it is to be done, we agree with much of HMRC’s strategy of bringing in the money/paying what people are entitled to, reducing costs and making it simpler for customers. But ARC has consistently taken the view that investing in HMRC, not cutting it, is more likely to bring in the money and provide better customer service. We think the price is worth paying. It’s critical to remember that ARC members will play a key role in delivery, regardless of which profession you’re in.
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This article looks at how ARC goes about promoting this view through its outward-facing activities. We are an independent trade union and not affiliated to any political party but as part of the FDA we are connected to the wider work of the TUC. Dave Penman sits on the General Council, and some key TUC committees. FDA delegates attend the annual Congress to speak on a wide range of issues. ARC is also closely involved with the FDA work on Delivering for the Nation, with Tony Wallace a key member of the working group. These are all opportunities that ARC reps take to stress the importance of HMRC and of ARC’s role within it. In case you’ve not seen it recently, it’s worth remembering the aims of Delivering for the Nation: `` promote the effective delivery of public services and raise awareness of how the work of FDA members benefits the nation and its citizens; `` advance the case for pay reform and secure action to improve the pay and reward of FDA members `` position the FDA at the centre of public debate on civil service reform `` reinforce the independence and impartiality of the civil service `` firmly establish the FDA as a modern, progressive and non-party political trade union, and `` build a network of influence
Public Understanding of Tax A few years ago we ran Defeat the Deficit, which I believe played a significant role in making the case for substantial investment into HMRC that was fulfilled with £917m. More recently we have started work on building that network of influence, continuing to raise awareness of the work of ARC members, and placing ARC at the centre of debates on taxation issues as an independent balanced opinion. For around a year, we have been 12
running a group that ARC convened to tackle the substantial lack of public understanding on tax and the work of HMRC. This group has members from the agent representative bodies, NGOs, independent academics, tax practitioners, and more. We have prepared a set of papers on some key issues, like the Tax Gap, avoidance and how HMRC deals with business. (You can download these on the ARC Forum and they will soon be available on a public website we are building to host such papers.) These papers have been widely accepted, reinforcing the view that ARC is a trusted source to provide balanced views on tax issues. The new website will form a platform from which we can set out our position on key issues, including HMRC’s role in providing the money for public services, and its need to be fully resourced. With the help of Connect we have organised two very successful Parliamentary events, attended by many leading tax professionals, politicians (such as the Exchequer Secretary to the Treasury and his Shadow), and the media. The last one (8 July) was co-hosted with Mazars. Paula gave it a thorough report in the recent CNQ Special Edition. Not only did discussion at the event cover public understanding, we also discussed Mazar’s proposals on a trusted Tax Adviser and the appropriate level of professional standards to govern them. There was even a suggestion of more regulation of the profession, akin to arrangements in place for the legal profession. We believe that our campaigning work is delivering support from professionals for a better resourced HMRC. For example, in the context of the disputed plans for Direct Recovery of Debts from bank accounts the ACCA commented that it “highlights a regular theme of ACCA’s submissions in recent years: HMRC should be properly funded and resourced to arcnews
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THE FUTURE OF ARC
adequately perform its rightful role as a credible and effective tax administration worthy of its reputation as a world leader in good practice and effective implementation of tax legislation.” The ICAEW said the same, in a letter to the Financial Times “I question the effectiveness of the year-onyear cuts imposed on the new department since 2005. The headcount will have reduced by about 40 per cent in a decade. Efficiency savings of £1.143bn were claimed for HMRC’s first five years, but the failure to keep Paye reconciliations up to date cost £953m in tax written off and a further £78m to stabilise the system. That was not efficiency and it was hardly a saving.” If HMRC is to regain public trust it must be properly resourced to deliver the standards taxpayers rightly expect and to enable it to exercise its powers in a way that inspires public trust and confidence. Direct recovery of debt is a power too far and it has once again brought to the surface this more fundamental issue. It is time to address it.” ARC is uniquely placed to provide a balanced view of why such reinvestment is vital. HMRC often needs to accept the hand it has been dealt, resource-wise, but ARC legitimately considers what might be, and how things could be improved.
Our Future But we are planning to do more. We think that the next phase will involve some smaller meetings where there can be more extended discussions and in more detail. We are talking to this wider community on the subjects to be covered, whether done under Chatham House rules (i.e. strict confidentiality and no attribution of remarks – so no live tweeting!), and so on. We’re considering hosting events to “up-skill” journalists, to help them report accurately, and providing workshops to teach MPs the basics arcnews
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to enable them to scrutinise legislation effectively. Already there are a number of significant online discussions where ARC is centrally involved. Where HMRC is constrained from speaking publicly, ARC is not. We will strive to fill that space with the reasoned voice of the State’s tax experts. These relate to ideas or plans that could have a real impact on how ARC members go about their work, the tools available to them, and the possible response of customers and agents. One of the more interesting is a recent post by a leading barrister (Jolyon Maugham) to the effect that a small number of barristers are giving tax advice for schemes that border on negligence. His proposed solution would be to make such professionals share some of the costs if a scheme eventually fails. Another barrister (David Quentin) has written that, in essence, any tax position that takes a risk is avoidance, even if the position is accepted. He even asserts that “creating the possibility that you have underdeclared your tax, throws an enforcement burden onto the tax authority which, depending on whether or not a successful tax authority challenge takes place, may result in your not paying tax which is legally payable. And to that extent evasion and avoidance are the same thing.” And finally we have been asked to comment on the recent HMRC consultations on tackling offshore avoidance, both by strengthening civil deterrents and by creating a new criminal offence. The latter has generated a lot of professional comments (mostly negative) but it would possible transform our approach to offshore evasion.
Feedback If you have any views on the consultative documents, or on any of the issues mentioned above, please get in touch so that we can reflect them in our contributions to the growing debate on public understanding
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MIDDLE MIDDLE
Caroline Murray, Head of Employee Engagement, explains how HMRC is fixing the plumbing and engaging with staff.
Engaging Leadership: Are you a plumber or a poet?
I
was delighted when Tony (Wallace) asked me to produce an article for arcnews a few weeks ago. It’s fair to say though, as I wasn’t entirely sure what I should write, I also experienced an equal amount of panic – and all at the same time! However, my inspiration arrived in the form of an article I recalled reading about leadership, called “Plumbing before Poetry”. The article referred to the corporate leadership role we all have (at whatever grade) in helping to address the processes and factors that lead to frustration and negativity for our people. It quoted a Stanford University Professor Emeritus, James G. March, who apparently once said, “Leadership involves plumbing as well as poetry.”
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EMPLOYEE ENGAGEMENT
The article suggested that, while it is important for leaders to explain the vision and values of our organisation to our teams, it’s equally important for us to understand what frustrates and annoys them. This really resonated with me as I felt it described exactly what we’d been doing within the HMRC employee engagement space since I stepped into the engagement role in May 2013. So, what do I mean? Well, one of the main recommendations from the results of last year’s Civil Service People Survey was the introduction of Building our Future. I believe this creates a real and genuine opportunity for everyone in the Department to discuss our vision (‘poetry’). Of course, we don’t intend that this conversation be restricted to the structured corporate sessions. We aim to embed it within our ongoing team discussions in order to understand how colleagues feel about working in HMRC and help make arcnews
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changes for the better. Alongside this, we’ve also been fixing the ‘plumbing’. Of course, the People Survey is a big bit of plumbing for us. It provides an incredibly valuable, once-a-year opportunity to get more detailed anonymous feedback on people’s frustrations and annoyances, as well as their response to the vision. To support this, we have been putting some robust engagement governance in place, working across the business to promulgate good practice in this area, analysing the People Survey data to prioritise engagement activity, as well as exploring the issues highlighted by the Survey in more detail with HMRC staff themselves (supported by ARC). Many examples of where the ‘plumbing’ is being actively progressed can be seen across the HMRC Newsroom, Employee Engagement intranet site or within local team updates. Nevertheless, I do genuinely appreciate that not everyone in the
Department may feel like they have personally experienced progress around engagement and its associated ‘plumbing’ because, by its very nature, it’s not a ”one size fits all” approach. What’s important to one group of people may be unimportant to another. This is why ongoing dialogue with teams remains essential to determine key areas of local focus. We all know there is no silver bullet that will deliver higher levels of employee engagement, and it will take time, effort and commitment. I consider everyone has a responsibility to make HMRC a better place to work – it is not the sole remit of leaders – but leaders create the environment to enable it to happen. So I’ll leave you with a question – what plumbing can you fix? We should all be creative and inventive (and involve our teams). I was going to add a link to some information on corporate leadership, but instead I’ll leave you with a picture of an inventive plumber 15
MIDDLE MIDDLE
Eugene Mitchell, ARC’s new Treasurer, lays down some principles and has a suggestion to make about arcnews.
Money, Money, Money ’m writing this article three months or so after taking up office following the 2014 AGM. Martin Fletcher, our previous treasurer who had carried out the role for about 20 years, had warned me that this would be the busiest time of the year for me, at least in terms of authorising and reimbursing expenses. I do hope he’s right! There are three main reasons for writing this article. Firstly to remind members of the process for reclaiming expenses incurred on ARC business. Secondly to set out some guidance on the level of expenses we expect to see claimed. And thirdly to seek feedback on a suggestion for cutting down on expenditure.
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ARC FINANCES
HOTELS
Use HMRC B&B capped limits
SUBSISTENCE
One Meal (e.g. breakfast or lunch): £8.25
SUBSISTENCE
Main Meal: £26.00
TRAIN
Standard class rate for the journey
MILEAGE
30p per mile limited to a maximum of the cost of a standard train ticket for the same journey
How to reclaim expenses The process for reclaiming expenses is straightforward and for everyone who adheres to it should result in their expenses being reimbursed on a very timely basis. Members have to do two things in order to be reimbursed. Firstly they provide Graham Flew (graham@fda.org.uk) with their sort code, account number and amount to be reimbursed. Graham will arrange payment as quickly as possible. I am very grateful to Graham for providing this service – even being off with a broken arm following some dirty dancing didn’t stop him processing payments quickly and efficiently. The second thing members have to do is to complete the ARC expense claim form (available in the members’ forum), attach the relevant receipts and send these to the address shown on the form. We operate on a pay now, check later basis. If receipts are not forthcoming they will be requested. And if they are still not forthcoming the member will be placed on a check now, pay later basis – I don’t anticipate this happening much.
Guidance on expenses Having experienced a few events which have incurred a relatively high level of expense claims, e.g. AGM in May and our equal pay event in June, I have witnessed some significant variation in the level of expenses incurred by members. Certainly most of us try to keep our costs down as much as possible. However arcnews
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in some instances it seems that there were opportunities to make some relatively significant savings that were not taken. We don’t have any formal guidelines in place and so I am introducing some guidance both to manage expectations and to ensure we make best use of members’ money. Guiding principles
`` Don’t travel unless absolutely nec-
``
``
``
``
essary. For example is it essential to have a face to face meeting – or would conference call/video conference do the trick? Try to avoid overnights and plan ravel well in advance. Take advantage of early booking discounts and avoid open, fully flexible tickets – only in the most extreme circumstances will buying ‘Walk up’ tickets be acceptable. Keep our expenditure as low as we possibly can – without making things unbearably uncomfortable for us. Use of a car should not be the norm where public transport provides a reasonable and viable alternative. Where possible double up travelling on union business with necessary travel on HMRC – so that it’s appropriate for HMRC to bear the cost of travel.
Maximum rates Within these guiding principles members will be expected to claim up to maximum rates shown in the table above – please consider them
as limits and not targets to be hit! Members are of course free to stay in whatever hotel they like and to travel in whatever class of travel they choose but these are the maximum amounts that will generally be reimbursed. Occasionally travel has to be arranged at very short notice and it can be difficult, in London particularly, to source hotels within the cap at short notice. Therefore these maximum rates can be exceeded where there is a good business reason for doing so. However remember that there are all sorts of websites that provide details of deals on hotels.
arcnews It costs around £4,750 to produce each edition of arcnews. £2,000 of this relates to design and layout while printing and postage comprises around £2,750. If we were to move to online publication we should be able to avoid the printing and postage costs which, based on 8 issues a year, would save us £22,000 a year. From a treasurer’s perspective I would like us to move to online publication as soon as possible. But I know from previous work we have done on communications that some members much prefer hard copy. So we are not going to make a change such as this without consulting with members. If you have a view either way, or even if you are indifferent, please let us know. I will open up a discussion on the members’ forum to allow people to share their views 17
LAST
If you really want to see how badly your salary has slipped, ask a pensioner, says Jeff Brice.
The Golden Generation
S
ome managers stay with you long after they or you have moved on. I can still remember the day that John Golding arrived in Gateshead 2 to take over as District Inspector some 33 years ago. I was just starting on the FT course (now TPDP; soon to become TSP) and John was only my second boss since joining the then Inland Revenue. He taught me a great deal in the few years we worked together; especially the hard bits about how to apply technical training to real cases. We have remained good friends ever since. I felt honoured when John asked me to deliver his valedictory when he retired in May 2006. And it is John’s retirement, or more to the point his pension, that prompts me to write this article. When he retired John had just reached the Grade 6 scale maximum following the 2005 pay agreement; which introduced pay progression from the scale minimum to the maximum in 8 years. His salary in his final full year before retirement, 2005-6, was £60,033; a few pounds short of the new G6 maximum of £60,520 because the pay increase took affect from July 2005. John had joined the Inland Revenue aged 16 and so had built up a pension entitlement that equated to 53.4% of this final salary. Since then, as the graph shows, his pension has increased from £32,021 in 2006 to £40,725 in 2014. This reflects the cumulative impact of RPI increases until 2011 and then CPI increases. His pension has increased every year except 2010. The overall increase in his pension since he retired is 27.1%. Now consider a colleague who was on the G6 scale maximum in 2006 but who has 18
remained with the department. This colleague’s pay in 2005-6 will have been the same as John’s; £60,033. In every year except 2009-10 this colleague’s pay increase will have been less than the RPI/CPI increase paid to John. The total increase from 20067 to 2014-5 is 7.9%; almost 20% less than John has enjoyed. And when the increase in pension contributions is factored in the comparison is even worse. Assuming our colleague is in the Classic Plus or Premium schemes, the increase in pay net of pension contributions from 2006-7 to 2014-5 is a paltry 1.6%. During this period the cost of living, as reflected in RPI/CPI, and as paid to John, was 27.1%. Add to this the fact that G6 pay was at least 30% behind market comparators in 2005, as shown by the department’s own evidence for the 2005 pay negotiations, and the effects of decades of below-inflation pay rises becomes very stark. There are several ways to look at this. If pay had kept pace with inflation since 2006 the G6 scale maximum would have been at least £76,920, over £10,000 more than the current figure. If CPI and pay increases are maintained at their current rates, John’s pension will exceed the G6 maximum before he reaches his 85th birthday. For anyone in the Classic Plus or Premium pension schemes pensionable pay will be significantly above their actual pay. Does John regard himself as from the golden generation? No, because his pay when he retired was already 30% below market comparators and there had been years of below inflation pay increases before he retired. But compared to his colleagues who are still serving the country he looks very fortunate indeed. The last time our pay was so clearly out of arcnews
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PENSIONS 80,000 70,000 G6 Max 60,000 G6 Max Pension Conts 50,000 40,000 30,000
Pensioner
20,000 10,000 0
2005/6
2006/7
2007/8
2008/9
step with the market there were disastrous consequences for the department. In the late 80s, following several years of government pay ‘restraint’, the discrepancy between public and private sector pay rates was such that the Inland Revenue was losing 10% of its inspectors every year. This was clearly unsustainable and
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2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
eventually there were significant pay increases to stem the tide of resignations. The Treasury lays great store by retention rates and, whilst the trend is definitely upwards, the rate is not yet at a sufficiently high level to ring alarm bells in Horse Guards Road. But when a tax professional can virtually double their salary by joining
a Big Four firm to do a similar job, it won’t be long before the resignation rate starts to rise to worrying levels. And the impact now, when there is already a structural shortage of senior tax professionals, and with the department’s awful demographic profile, will be far worse than in the 1980s. There is another worrying trend in that senior tax professionals are starting to retire early because the indexation from their best pay year outweighs the actuarial reduction from taking early retirement. Both ARC and the department rightly monitor resignations but they should both start to monitor early retirements. The impact on the department is the same; it is losing the people who are key to delivering compliance yield targets. If you are planning to retire early, or resign, because of the erosion of your pay and terms & conditions please write to arcnews. It is vitally important that we keep this issue at the top of our agenda
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